Chasing the China market: Airbus lands Chinese deal

5th December 2005, Comments 0 comments

PARIS, Dec 5 (AFP) - China signed its biggest-ever deal with European aircraft maker Airbus on Monday, ordering 150 of the European mid-range planes worth nearly US $10 billion during a visit by Chinese Prime Minister Wen Jiabao.

PARIS, Dec 5 (AFP) - China signed its biggest-ever deal with European aircraft maker Airbus on Monday, ordering 150 of the European mid-range planes worth nearly US $10 billion during a visit by Chinese Prime Minister Wen Jiabao.

The contract, signed by Airbus chief executive Gustav Humbert and the president of the China Aviation Supplies Import and Export Group, Li Hai, covers aircraft from Airbus's A320 family of single-aisle planes.

The ceremony was also attended by French Prime Minister Dominique de Villepin.

The deal is nominally worth about US $9.7bn (EUR 8.3bn) based on catalogue prices, but discounts are usually applied on large orders.

President Jacques Chirac, who met Wen just before the signing, welcomed an "important cooperation protocol" which China and Airbus had signed Sunday, opening the way for the purchase contract.

That protocol aims to "upgrade" cooperation between the European plane manufacturer and China's civil aviation sector and includes the "possibility" of establishing an Airbus assembly plant in China that would turn out single-aisle planes like the A320.

Wen, laying stress on the potential assembly plant, said: "Sino-French cooperation in the aeronautic sector is no longer limited to the acquisition of aircraft, but has entered into a phase of technological cooperation and development."

The Chinese government delegation, which counted the foreign and culture ministers and several senior officials, also signed a contract jointly to produce with the helicopter manufacturer Eurocopter a new helicopter of six to seven tonnes. The aircraft, named the EC175, is to go into development in 2006 and production is to start in 2011.

Eurocopter is a fully owned subsidiary of the European Aerospace, Defence and Space (EADS) company. Airbus is owned 80 percent by EADS and 20 percent by BAE Systems of Britain.

EADS shares jumped 1.98 percent in Paris midday trading to EUR 32.43.

Other contracts signed included a deal for the French company Alcatel to make a Chinasat 6B telecommunications satellite, and a 150-million-euro financing agreement for the construction of a high-speed rail line in China.

Villepin said that "these advances form part of the long-term industrial and technological partnership we want to establish with China", adding that all the deals added up to "nearly nine billion euros".

The prime contract, the one involving Airbus, calls for the European company to supply China with A320s, which typically seat 150 passengers, and modified versions of the aircraft: the shorter A319, which typically has 124 seats, and the longer A321, which can seat 185 people.

Airbus said in a statement the deal marked "the largest single order that Airbus has ever received since it entered the Chinese market two decades ago."

It said the aircraft would be delivered to six Chinese airlines: Air China, China Eastern Airlines, China Southern Airlines, Sichuan Airlines, Shenzhen Airlines, and Hainan Airlines.

An Airbus spokesman, David Velupillai, told AFP that the contracts for 150 planes were all firm orders.

Airbus is seeking to topple US rival Boeing's dominance of the Chinese civil aviation sector by clawing its way up to 50 percent market share. It currently has only around a third compared to Boeing's 60 percent.

Boeing last month notched up firm orders for 70 of its mid-range planes, the 737s, and options for another 80 during a visit to China by US President George W. Bush.

In a nod to the growing importance of economic relations with China, Villepin used the opportunity of a joint media conference with Wen to denounce an EU arms embargo imposed on China in the wake of the 1989 Tiananmen Square massacre as an "anachronism".

He said: "It does not reflect the reality of our relations with China, nor the strategic partnership we are building with it." France has been seeking to have the embargo lifted.

But 97 French MPs, all members of a parliamentary group on Tibet, also jumped on the occasion of Wen's visit to demand that France press China on the future of the mountain territory.

The head of the group, Lionnel Luca, a member of the UMP ruling party, wrote to Chirac saying it wanted "concrete decisions" to be made for the Tibetan people, for instance by having the exiled Dalai Lama received by officials in Beijing.

Wen, who is leading a 70-strong delegation including his foreign and culture ministers and several Chinese business leaders, was to meet representatives from the French employer's federation MEDEF late Monday and on Tuesday he was to visit the elite research university the Ecole Polytechnique south of the capital.

Wen was then to go to the southern city of Marseille to visit the Eurocopter helicopter factory, and to view the nearby site of the future experimental nuclear fusion reactor ITER, in which China is a partner.

Wen leaves France on Wednesday and was to continue his European tour with stopovers in Slovakia, the Czech Republic and Portugal.

Copyright AFP

Subject: French news

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